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Traders frustrated by higher LME fees drawn to alternative platforms

Rising fees and attempts to draw high-speed electronictraders to the London Metal Exchange are prompting existing users to look atother avenues, London's Financial Timesreported July 13.

LME traders are now trying to circumvent its fee structure, thepublication wrote, citing Simon van den Born, the global head of metals atbroker Marex Spectron.

The exchange is facing broker complaints at a time of risingcompetition from other exchanges in the U.S. and China.

LME CEO Garry Jones has defended the costs, claiming thatthe fees are "competitive with other exchanges" and that the downturnin the commodities market has added to the frustration of traders.

In mid-June, the executive director of Shanghai GoldExchange International, Lila Lu, told SNL Metals & Mining that the ShanghaiGold Exchange is continuing talks with Hong Kong Exchanges & Clearing Ltd.,the parent company of the London Metal Exchange, to bring its domesticallytraded contracts to a global audience, but is not interested in a direct partnership with the LME.

In early June, former LME CEO Martin Abbott spoke ofcreating a new study group to explore the potential for a new metals-trading platform due to concernsthat trading on the LME had become too expensive.

Former LME Chairman John Wolff said, "The exchange isbecoming the broker?…?and costs are going up. I think they lost sight of thetrade. The danger has always been that the trade might stop using them as thebenchmark price, and that would be a very serious blow."